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easyMCQCUET Accountancy 2025 14 May Shift 12026Accountancy
1 mark

Excess value of net assets over purchase consideration at the time of purchase of business is credited to

  1. A
    General reserve
  2. B
    Capital reserve
  3. C
    Vendors' account
  4. D
    Debenture Redemption reserve

Solution & Step-by-step Explanation

When a business takes over net assets () that are worth more than the negotiated purchase consideration price, it gains a capital profit. This difference is credited to the Capital Reserve Account.Conversely, if the purchase price exceeds the value of net assets acquired, the excess is debited to Goodwill.

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Excess value of net assets over purchase consideration at the time of purchase of business is credited to
A
General reserve
B
Capital reserve
C
Vendors' account
D
Debenture Redemption reserve

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